Wealth in Australia: HNW Investors 2017

"Wealth in Australia: HNW Investors 2017", analyzes the investing preferences and portfolio allocation of Australian HNW investors. The report is based on our proprietary Global Wealth Managers Survey.

Australia is known for its multicultural landscape, which is reflected in the countrys HNW market. HNW investors in Australia stem from a range of different backgrounds and have distinctive demand patterns. The bulk of HNW individuals have accumulated their wealth through earned income, and the financial services and mining sectors are key generators of wealth. Investors show a strong affinity for equity investments, allocating almost half of their wealth into this asset class in order to benefit from Australias dividend imputation system. When it comes to asset management services, advisory is the preferred type of mandate, but wealth managers cannot afford to ignore the opportunity automated investment services provide

Specifically the report - - Profiles the average Australian HNW investor in terms of their demographics and analyzes the expat opportunity in Australia.- Analyzes which wealth management mandates are preferred among Australian HNW investors and how demand will develop going forward.- Examines the allocation of Australian HNW investors portfolios into different asset classes and how the allocation is expected to develop in the future.- Analyzes product and service demand among Australian HNW investors.

Scope

- Almost half of HNW individuals in Australia have accumulated their wealth through earned income, but entrepreneurs and family business owners are also key segments.- While representing a slightly lower proportion than in the wider region, expats still constitute an attractive target segment in Australia, accounting for 8.3% of the countrys HNW individuals.- A lack of time is driving uptake of professional advice, while a reluctance to relinquish control has seen advisory asset management become the service of choice.- Australian HNW investors show strong and rising demand for tax, pension, and financial planning, but demand for all planning services is on the rise, making a multi-service proposition critical.

Reasons to buy

- Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.- Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors drivers for seeking investment advice vs self-directing.- Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.- Develop your service proposition to match the product and service demand expressed by Australian HNW investors and react proactively to the forecasted changes in demand.

Table of Contents1. EXECUTIVE SUMMARY 31.1. Australian HNWs come from a range of different backgrounds 31.2. Key findings 31.3. Critical success factors 32. PROFILING THE AUSTRALIAN HNW INVESTOR 92.1. HNW investors who have accumulated their fortunes through earned income remain the largest segment 92.1.1. The vast majority of Australian HNW investors are approaching or have reached retirement age, making wealth preservation strategies key 92.1.2. Professionals dominate Australias wealth market, but entrepreneurs are also a lucrative target market 102.1.3. The financial services industry is the main wealth generator, but mining remains important 112.1.4. Australian HNW investors are more likely to hold director roles than their peers in the wider region 122.2. Expats are a below-average but lucrative segment in Australia 132.2.1. Expats constitute 8.3% of the local HNW population 132.2.2. Stricter investment criteria under the Significant Investor Visa has resulted in a drop in applicants 142.2.3. HNW expats from the UK and Asia Pacific represent an attractive target segment 152.2.4. Fear of having insufficient control and steep forex fees motivate HNW expats to invest in Australia 183. HNW INVESTMENT STYLE PREFERENCES 193.1. A lack of time is driving uptake of advice 193.1.1. Australian HNW investors use an average of two wealth management firms 193.1.2. Lack of time is motivating HNW investors to seek professional advice 203.1.3. The majority of HNW wealth is kept in advisory mandates 213.1.4. However, a multi-asset management strategy is key in Australia 223.2. Automated investment services are not a threat, but an opportunity 233.2.1. Demand for automated investment services is on the rise 233.2.2. Investors reluctance to relinquish control means that advisory mandates will maintain their leading position 243.2.3. Cost considerations are driving uptake of self-directed services 264. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG AUSTRALIAN HNW INDIVIDUALS 284.1. A desire to further diversify their portfolios will drive uptake of alternatives among HNW investors 284.1.1. Equities dominate the typical HNW portfolio, exposing it to greater volatility 284.1.2. Equities constitute almost half of HNW investors managed wealth 294.1.3. Bond investments have decreased in popularity over the past year, and will continue to do so 314.1.4. Cash and near-cash investments constitute a significantly smaller part of the Australian HNW portfolio than in the wider region 334.1.5. Some work has to be done to convince investors of the benefits of alternatives 384.1.6. Commodity investments are of little interest to Australian HNW clients 405. HNW PRODUCT AND SERVICE DEMAND 435.1. Wealth managers should lead with financial planning and SMSF services 435.1.1. Superannuation is a critical element of wealth management, even for HNW investors 435.1.2. A multi-service proposition is key to competing in Australias HNW market 446. APPENDIX 466.1. Abbreviations and acronyms 466.2. Definitions 466.2.1. Affluent 466.2.2. HNW 466.2.3. Liquid assets 466.2.4. Mass affluent 466.2.5. SMSF 476.2.6. Superannuation 476.3. Methodology 476.3.1. GlobalDatas 2016 Global Wealth Managers Survey 476.3.2. GlobalDatas 2015 Global Wealth Managers Survey 476.4. Bibliography 486.5. Further reading 48

List of FiguresFigure 1: The average Australian HNW investor is male and above the age of 50 10Figure 2: Professionals dominate Australias wealth market 11Figure 3: The bulk of HNW investors have sourced their wealth from the financial services sector 12Figure 4: Director is the most common title held by Australian HNW individuals 13Figure 5: Expats represent a below-average proportion of the Australian HNW population 14Figure 6: UK migrants dominate Australias HNW expat market 16Figure 7: Credit Suisse targets HNW expats in Australia 17Figure 8: HNW expats residing in Australia want to stay in control of their investments 18Figure 9: Australian HNW investors prefer to work with two wealth management firms 20Figure 10: Lack of time drives financial advice uptake, making convenience an implicit part of a wealth service 21Figure 11: The majority of HNW wealth is in advisory mandates, meaning it is a critical element of every wealth managers offering 22Figure 12: Australian HNW individuals demand advisory mandates, reflecting a desire for control 23Figure 13: Demand for automated investment services is forecast to increase 24Figure 14: HNW investors are reluctant to relinquish control over their investments 25Figure 15: Australian HNW investors self-direct at least some of their wealth to avoid management fees 27Figure 16: Australias HNW investors are heavily exposed to equities, although future growth will be in other asset classes 29Figure 17: HNW investors prefer direct equity holdings, making market access a hygiene factor 30Figure 18: Capital appreciation opportunities and dividend income are the top drivers of equity investments 31Figure 19: HNW investors allocate just 7.3% of managed wealth to fixed-income products 32Figure 20: Demand for fixed-income products is set to decrease 33Figure 21: Less than 13% of managed HNW wealth is held in cash products 34Figure 22: Already low HNW demand for cash products is expected to stagnate 36Figure 23: Offering REITs is a must in Australia given the countrys strong property market 37Figure 24: Rental income is the key driver of property investments 38Figure 25: Alternatives constitute a minor proportion of the typical HNW portfolio 39Figure 26: Diversification benefits are driving demand for alternatives 40Figure 27: Commodities are of little interest to Australian investors 41Figure 28: Commodity holdings are forecast to remain low 42Figure 29: Financial planning services experience by far the strongest demand 44Figure 30: Already strong HNW demand for financial and pension planning services is forecast to increase further 45